Moderate Morning MBS Losses Turn Into Healthy Afternoon Gains

Another data-less day has passed and we've seen another day of chopatility led by technical inflection levels surrounding the Fed's open market operations.

Yesterday it was "morning session good, PM session bad," and today it was "morning session bad, PM session good".  MBS and Treasuries alike languished until 2pm.  But the downtick was fairly measured and well contained by technical support, although things did get choppier as the afternoon pre-POMO (2nd operation of the day)  trade coincided with lighter and lighter volumes.  

Here is a recap of 5pm marks...

For mortgages, the end result was a Fannie 4.0 that gained half a point trough to peak and closed at the highs, better than mid-range versus yesterday's prices. Those FN 4.0s sure do love a bull flattener into decling vol!

Treasuries did not disappoint from a technical perspective, visiting numerous, tightly packed trendlines, even testing the long term 62% retracement and moving back below for a 2nd day now (good thing generally speaking). SEE AQs TACTICAL INFLECTION LEVELS

A more middle term chart of 10 yr yields shows the ridiculously linear and mathematical movements around not only longer term technical levels, but also a condensed framework of pivots everywhere in between.  Today in particular, 3.37/38 was in play with big time support, and both the AM and PM hours were capped by resistance at 3.305.  Next "biggie" on deck is 3.27, which we may or may not get a chance at tomorrow.  But I guess the most important thing is that if we do see yields test 3.27, will it be with enough volume to care?

Today's bounces did not have much volume behind them and are pointed out solely to illustrate the highly technical nature with which the market is trading.  With the return of Econ data tomorrow, we'll be watching to see if we get some sort of re-connection to fundamentals. Final Q3 GDP at 830AM. HERE IS THE FULL ECON CALENDAR

Reprices for the better were reported late this afternoon, but these recalls followed mid-day rebate reductions. In the end loan pricing is still a bit worse on the day. HERE IS A CHART OF LOAN PRICING